To borrow from the “Brady Bunch” theme song, here’s the story… of a man named Jimmy…
Wikimedia Foundation Board of Directors includes: Jimmy Wales (Chairman Emeritus) and Michael E. Davis (Treasurer). Wikimedia Foundation also enjoys the services of a former Board member, who remains a member of the Communications Committee of the Wikimedia Foundation and also chairs the Foundation’s Advisory Board: Angela Beesley.
Contrast the above list of individuals with a list of key players at the for-profit Wikia, Inc.: Jimmy Wales (co-founder), Michael E. Davis (Treasurer and Secretary), Angela Beesley (co-founder and vice president for community relations).
Non-profit and for-profit board members and accountants both have fiduciary duties to act in the best interest of their organizations. By various laws and governance principles they have to recuse themselves or avoid involvement when there is a conflict of interest. Even a perceived conflict can be corrosive to governance and is sometimes prohibited because donors and volunteers lose faith. Someone who is on the board of Wikimedia Foundation or prepares its finances and also has a financial stake in Wikia should be very careful about taking positions within Wikimedia properties that could benefit Wikia by directing traffic there, banning things from Wikipedia so as to distinguish it from a commercial site, making Wikipedia less attractive to constituents than Wikia, etc. Actions that seem to raise a conflict might include hiring personnel from the volunteer Foundation to work at the for-profit corporation, installing Wikia, Inc. employees into positions of power within Foundation properties, selectively banning some commercial links while allowing others, travel and speaking engagements for the Foundation that are also used to drum up support for the for-profit venture, etc.
It would appear that all of these warning signals have been played out in reality at the Wikimedia Foundation.
The IRS form 1023 notes in Line 5a: A “conflict of interest” arises when a person in a position of authority over an organization, such as a director, officer, or manager, may benefit personally from a decision he or she could make. Note also Appendix A of said form, starting at Page 25, which outlines a sample Conflict of Interest policy that a non-profit organization might adopt. For years, there was no indication that the Wikimedia Foundation had such a policy, nor is there any online record that the Board of Directors have ever discussed (without Wales, Beesley, or Davis present in the conversation) whether a conflict of interest was present for those three, who happen to be both former and current business partners and are currently vested in Wikia, which has benefited from many, many favorable associations within Wikipedia:
(1) An article by Nik Cubrilovic on TechCrunch.com outlined how in Febuary of 2005 the Wikipedia community voted in favor (by a vote of 61% to 39%) of removing “nofollow” tags (which have the effect of dampening Google search engine results for said links), but this outcome was overruled by Jimmy Wales, in early 2007. It seems that while the nofollow tag is added to standard outbound links, it is not applied to inter-wiki links, which would include certain formatted links to Wikia.com. That is, Wales’ personal decision to overrule the community consensus had the effect of particularly benefiting the search results for his for-profit business, Wikia, Inc. Wales has denied that he gave the order to add “nofollow” to all non-interwiki links; however, the code developer who implemented the change has expressly stated that he was instructed to take these actions by Jimmy Wales.
(2) There are currently over 9,400 outbound links from Wikipedia to Wikia.com sites — which are supported by revenue-generating advertising from Google AdSense banners and contextual ads. Furthermore, Amazon was the sole investor in Wikia’s second round of capital generation, purportedly to the tune of $10 million. Meanwhile, Amazon enjoys over 27,500 outbound links from Wikipedia, not to mention nearly 120,000 outbound links from Wikipedia to IMDB.com, which is wholly owned by Amazon. Virtually every page of IMDB.com contains glitzy images and links to buy products from Amazon, even in German or French. There is no denying that Amazon is benefiting from sales traffic being generated by the Wikipedia website, which is governed in part by a Board staffed with Wikia principals, who are in turn funded by Amazon. This is a three-way racket.
(3) There is a court case ruling against Michael E. Davis. This is important, as it shows that Davis has not paid $817,830 that he was judged to owe the plaintiff. Donors to the Wikimedia Foundation are simultaneously being asked to “trust” that Davis will do a good job with the books at both Wikimedia and Wikia, Inc.
(4) The Wikimedia Foundation’s own Form 990 indicates on Line 80 that there is a personnel relationship between Wikia, Inc. and the Foundation. Yet, the Wikipedia article about Wikia, Inc. has been edited to say that “Wikia, Inc. is independent from the Wikimedia Foundation…”
(5) Angela Beesley (co-founder of Wikia, Inc.) has publicly noted that she has reclaimed rejected Wikipedia articles that were entered into the non-profit encyclopedia under the GNU Free Documentation License, and re-constituted them on the Wikia website for the benefit of Wikia’s content and ad-clicking traffic. In so doing, she is exploiting for personal profit the Wikipedia community’s work, which would not be unethical — were it not that she acts as the head of the Wikimedia Foundation’s Advisory Board and works on the Communications Committee for the Foundation.
(6) Larry Sanger neatly summarized the events surrounding a scandal that took place in early 2007. In January, Wikia, Inc. hired a 24-year-old named Ryan Jordan, in full knowledge that on Wikipedia he had been impersonating a multi-degreed college professor. In February, Jimmy Wales personally appointed Jordan (user name “Essjay”) to the Wikipedia Arbitration Committee — the highest panel of dispute resolution below the Board of Directors — knowing that Jordan had been impersonating a professor, and probably knowing that Jordan had perpetuated the charade with a Pulitzer-winning journalist at The New Yorker. The Arbitration Committee, by rule, had to accept Wales’ nomination of Jordan. Presumably, many of the Committee members also knew that Jordan had been impersonating a professor. Later that month, when Wales told The New Yorker, “I regard it as a pseudonym and I don’t really have a problem with it,” he was referring to the fact that Jordan had been impersonating a professor. The resulting firestorm surrounding Jordan’s fabricated credentials seems to have drowned out what may be the even larger ethical question — Jimmy Wales installed a Wikia employee, without debate, onto the Foundation’s most visible chamber of dispute resolution, without anyone questioning it.
(7) Jimmy Wales makes Wikipedia-related pronouncements when he is traveling for speaking engagements, and these have a quasi-policy effect within the encyclopedia. Yet, during these same speaking engagements, Wales will boost and promote his various Wikia-related projects for profit. Even in his public speaking, he cannot comprehend that he is ensnared in a tangled web of conflicted behavior. The Foundation board does vote on resolutions that affect what the encyclopedia looks like, how content is licensed and distributed, and how Wikipedia goes about its business generally. If a board member were to say “We do not do X on Wikipedia, that is for other wiki sites”, this implies “wikis such as Wikia, Inc., where I might make some money from it.” Wikimedia Foundation donors and volunteers should be concerned. It is the prerogative of the stakeholders to discuss conflicted management issues; however, thus far, these calls have fallen mostly on deaf ears.
This contributor feels that it is time for the federal authorities to step in (IRS Form 3949 A, perhaps) and at least investigate these claims of conflicted behavior among specific members on the Board of Directors of the Wikimedia Foundation, who are clearly using Wikimedia properties such as Wikipedia to personally benefit financially at Wikia, Inc.
End note: Substantial portions of this summary were culled and modified from discussions found on various websites, including Wikipedia. The authors of those portions are heartily thanked for their insight.